May 9, 2013

Microsoft May Be Adding E-Readers To Its Hardware Portfolio

Microsoft entered the tablet game last autumn with its first entry: Surface. Now one news source is saying the Redmond, Washington-based company may be looking to add e-readers to its hardware portfolio as well as expand its digital content distribution.

TechCrunch today is reporting that Microsoft is looking to buy the digital assets of Barnes & Noble´s Nook Media LLC, a business run by the bookstore chain and other investors, for $1 billion. These papers allegedly draw a deal which would place Microsoft in control of the digital operation of Nook Media, including e-books, college text books, and even Nook e-readers and tablets.

What´s more, TechCrunch claims these documents detail the Nook Tablet´s death by 2014. The book seller may also be looking to create a model of Nook which receives its content from “third-party partner” devices. These documents are allegedly unclear if third-party partner devices means Windows 8 tablets, tablets from other manufacturers, or if the Nook will work with both types of tablets. Whichever way they turn, TechCrunch reports that the third-party partner tablets will be introduced next year. Rumors about the death of the Nook tablet first arose in February.

The same documents do not outline the death of the Nook-reader.

The company's Nook e-readers (and more recently tablets) have never enjoyed the kind of sales numbers as the rival Amazon Kindle, and admitted earlier this year that they generated 26 percent less profit in the 2012 holiday quarter than they did the year before, according to ZDNet. This helped to spur speculation that B&N may be looking to exit the hardware business soon, though they denied such a move.

Currently, there are roughly 10 million Nook e-readers and tablets in the wild with more than 7 million active subscribers. Nook has also developed applications for each of the major platforms, including Android, iOS and Windows.

If these documents are correct, this would act as the next logical step for Microsoft. Last April the software giant injected $300 million into the Nook e-reader business to help bring Nook content to Windows 8 devices. At the time the move was seen as a strategic one to make reading easier on Windows devices. Microsoft even paid B&N an advance of $180 million to begin creating content for the Windows 8 platform.

This plan is also set to separate the Nook from Barnes & Noble´s retail portion of the business. In October of last year, this new company was given a proper name and a business model when Nook Media LLC was debuted.

Nook Media split from the company with Microsoft´s previous investment of $300 million which gave them a 16.8 percent stake in the new company. As mentioned earlier, Nook hardware has taken a dive since last October, though their content sales actually grew by seven percent. This puts the entire value of Nook Media LLC at an estimated $1.66 billion, just over the $1 billion Microsoft is expected to pay to take over the company.